Page 8 - Nevada Cooperator Winter 2020

8 THE NEVADA COOPERATOR — WINTER 2020 NEVADACOOPERATOR.COM BOARD OPERATIONS Managing Conflict When Boards and Residents Take Sides BY A J SIDRANSKY One of the unique aspects of life in a condo community is that a building or care, “Board members must basically un- HOA is in many ways a microcosm of the derstand what’s going on in terms of the ciary responsibility.” An example might larger world outside. It can suffer from the building,” Davidson says, adding that be voting to permit Airbnb rentals. Do- same factionalism and partisan bickering their primary responsibility is to make ing so might provide a particular board as any political entity, only on a much sure the property is well and effectively member with additional income, but their smaller, more intimate—and therefore managed. potentially more damaging—scale. Con- flict and divisions in condo communities “Requires adherence to conflict of inter- can and often do bleed into the commu- nity’s administration: the manager and means that a board member must put the board of directors. Even a seemingly mi- nor conflict can upend a residential com- munity if it’s not dealt with diplomati- cally—so boards and managers must be you shouldn’t recommend him for roof derstand, fairly enforce, and personally prepared to step up, step in, and do their repairs to the building. In the more ab- part to defuse such issues before they turn stract sense, Davidson points out that ad- into something worse. Board Obligations Michael Davidson is the president of in other not-for-profit organizations, be- BoardCoach.com, a New York City-based cause in a residential context, every board tors,” explains Davidson, adding that “The company that specializes in nonprofit member presumably owns a unit, and problem is that co-op boards are very board development and management may make decisions based on what may different from other nonprofit boards in support, including coaching. Davidson benefit them, but not their neighbor. explains that board members of nonprofit entities (including condo and homeown- ers associations) have three main duties they are, at their core, somewhat differ- to which they must adhere: “The duty of ent from non-residential nonprofits,” he three administrative pillars, “Successful, care, the duty of loyalty, and the duty of says, “because the board members are functional boards need persons who work obedience.” With regard to the first, the duty of investors or owners in the nonprofit, and The second duty, the duty of loyalty, rading through the property. Both have est obligations.” In simple terms, that not always align seamlessly. community’s welfare before their own. members—the duty of obedience—is of A good example would be that if your the most importance for co-op and condo brother-in-law owns a roofing company, board members. It calls upon them to un- herence to this duty is less clearly defined “The members of the board owe a duty to in a residential association than it may be keep within the powers of the corporation “While condo boards represent non- profit corporations and associations, inherently more conflict-prone.” their board positions carry a heavy fidu- neighbor(s) might not want strangers pa- vested interests, but those interests might The third duty incumbent upon board abide by the governing documents, poli- cies, and protocols of their community. and within those of the board of direc- that everyone on the board has a personal interest in every issue. This makes them When it comes to upholding these in tandem, work well as a team, are well organized, and have different areas of ex- pertise to offer,” says Robert Silversmith of the New York City-based Silversmith & Associates Law Firm, PLLC. “Boards should openly and amicably communi- cate with all board members as a collec- tive group.” The Reality of Condo Community Conflict Sheila Van Duyne is the principal of the Van Duyne Law Group located in Reno, Nevada. She has seen many ex- amples of factionalism in condominium and HOA communities, and agrees that transparency is the best way to avoid the problem. “If you are on the board, you have to bring people into the process. The key is transparency, which justifies deci- sion-making and educates the ownership. Sometimes a board may have to make de- cisions that are unpopular with the com- munity; \[residents\] may hate the decision, but the board had no other choice. They may have been between a rock and a hard place.” Van Duyne further suggests that “One approach to defusing the situation is to get those homeowners who are dissatis- fied to get involved in the governance of the community. Get them on a commit- tee. Let them piece together a solution to their problem and make a recommenda- tion to the board.” After all, the view may be different from the inside. Howard Goldman is a partner with Goldman & Pease, a law firm located in Needham, Massachusetts. He represents numerous condominium associations, and says that factionalism happens all too easily when “There is a controlling group on the board, and those not in agree- ment feel out of control and frustrated. Often, those in the latter role feel disen- franchised, and that no one is listening to them.” Goldman says there are two potential approaches to getting controlling board members to listen. One is to take what’s called a ‘derivative action,’ which is basi- cally a lawsuit brought by a corporation shareholder against the directors, man- agement, and/or other shareholders of the corporation for a failure to uphold their duty to the corporation as a whole. In the world of condominium ownership, a de-